Olaf Owns a Carpentry Business and Is Considering Two Different

question 236

Multiple Choice

Olaf owns a carpentry business and is considering two different types of saws, both of which would cost $1,200. Saw A would last three years and generate an additional $500 of revenue per year. Saw B would last only two years but would generate an additional $700 of revenue per year. Assuming an interest rate of 5%, which statement accurately describes Olaf's options?

• A) Neither saw would be a wise investment because both saws provide a negative rate of return.
• B) Saw A has a higher rate of return than Saw
• C) Saw B has a higher rate of return than Sawd.
• D) Both saws are equally attractive in terms of rate of return.

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Definitions:

Tragedy Of The Commons

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Cap-And-Trade System

An environmental policy tool that sets a limit on emissions and allows entities to buy and sell permits for emitting greenhouse gases.

Carbon

An element that is the fundamental building block of life and a major component of many substances, including carbon dioxide and organic materials.

Reverse Logistics

The process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal.